A lesson from history for Bill Gates

Llew Cross

by Llew Cross

Bill Gates would like all consumers to pay extra for products produced by robots that replace humans in the form of a tax on robots. Seems reasonable? Don’t be fooled. By levying a tax on robots of manufacturing, the cost of this tax will be passed onto the consumer through higher prices of goods and services. Robots are just another step in the chain of increasing efficiency. We have forever been trying to find new ways to become more efficient, to spend less time producing more, to make us wealthier and lift society out of poverty.

In the 16th century, around 75% of the population of England were working the land, earning the lion’s share of their income from farming (livestock or crops). The British Agricultural Revolution brought huge increases in efficiency. Wheat yields more than tripled from the 16th century to the end of the 19th century, rye yields almost tripled, barley, peas and bean yields doubled and oat yields quadrupled! New technology and ideas brought increased wealth to agrarian England. Large amounts of time were spent digging, cutting wood and threshing amongst other necessary activities. The automation of these activities allowed the feudal peasants to redeploy their efforts in more productive means that are lower in terms of need. Now by Bill Gates’ logic, all the innovations and increased efficiencies would reduce the number of people necessary to farm for the same output. Should we tax those innovations because they put people out of jobs?

What about looms and industrial automation during the industrial revolution? Should all those same innovations and increases in efficiency be arbitrarily taxed because it meant fewer workers were needed for that specific task? Should we tax cloth used for sails on ships because it replaced men rowing? Should we tax steam engines because they replaced sails? Should we tax internal combustion engines because they replaced steam engines?

Bill Gates’ position is arbitrary, not principled. If increases in efficiency should be taxed, should Bill’s incredible software developments be taxed as they make us more efficient? No they shouldn’t. The software is desired by consumers as it improves their lives. We all prefer cheaper manufactured goods. Robotic manufacturing is the way. With reduced input costs and tax payable, companies can lower prices in order to try and capture a greater market share. Technological improvement has bought lower real prices and better products to consumers in free markets through competition.

It seems counter intuitive but it is reasonable to assume there will always be new jobs. Why? Human want is limitless. Goods and services are scarce. There will always be a way to deploy resources more efficiently, freeing up capital (both human and physical) and allowing us to move into new endeavours. Manufacturing robots won’t cause mass unemployment in the same way that agricultural innovation, steam power and computers didn’t cause mass unemployment.

There will always be periods of adjustment when new technologies displace the need for human labour for a specific task. However, would you rather be living in 16th century England ploughing some land you don’t own with an ox, producing a meagre crop to support a subsistence lifestyle of grinding poverty? Or would you rather accept that with gains in productivity and efficiency we are not only making it easiest for all of society to become wealthier, we also give ourselves the ability to apply our efforts in a more lucrative manner? As Johan Norberg has pointed out, extreme poverty has fallen below 10% for the first time in history. In 1820, 94% of humanity lived in extreme poverty. Efficiency and productivity gains have lifted humanity out of poverty.

Improvements in technology make us wealthier and improve the lives and purchasing power of individuals all over the world, as it has done throughout history. The world is getting better every day. Why should we pull the handbrake now?


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